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The Five Species of Luxury Consumer

With luxury on the rebound, companies once again are obsessed with the mythical “luxury consumer.”

Bloomberg News

Walk on by: Perhaps a beyond-moneyer?

This dream spender is, we are told, wealthy, young, beautiful and prone to buying $4,500 bicycles for their dogs. As for the global financial crisis…well, what financial crisis?

But a new report from BCG Research digs deeper to divide the luxury consumer into five distinct species. BCG surveyed six luxury markets–the U.S., Brazil, China, Japan and Russia, and Europe. They found that each of the five species has experienced the financial crisis differently. They are:

The Aspirationals. Those with $85,000 or more in annual income in developed markets or $29,000 in emerging markets account for four out of every five luxury purchases in the markets studied, according to BCG. They aren’t big spenders individually, but together they account for a third of all luxury spending. There are 115 million of these households in the studied markets.

Rising Middle Class. This oddly named group has incomes of $170,000 or more in the U.S. and $55,000 in emerging markets–making them fare more affluent than the real “middle class.” But they account for 25% of luxury spending in the studied markets. There are 25 million of these households in the markets studied. They spend most of their money on cosmetics and fragrances, and they like leather goods.

New Money Households. The New Money crowd has investible assets of $1 million or more, and they spend about $90 billion a year on traditional luxury, or about a third of the market. There are six million of these households in the markets studied. They like fashion and clothing.

Old Money Households. The Old Money group inherited its money and is far more frugal, accounting for only 7% of luxury sales. There are one million of these households in the markets studied.

Beyond-Money Households. This group may be self-made but it shuns status spending as ostentatious and tasteless. “Their disdain for luxury brands is, in a way, an affirmation of their elite status.” There are about a half million of these households. When they do spend, they spend on watches, jewelry, furniture decorations.

The financial crisis has changed the first three groups most. As money became tight, or as they grew tired of more stuff, they began to question why they buy luxury goods. They are now more frugal, looking for understated brands and more value and discounts.

“Luxury has lost much of its mystique,” the report said. “The challenges posed by this conceptual shift will be more fundamental and lasting than the challenges that arose from the crisis.”

Do you know of any other species of luxury consumer? Are they still spending?